Apple Could Challenge Microsoft for Desktop Dominance. But It Won’t

Apple’s opportunity to dominate desktop computing probably disappeared the day in 1981 that IBM shipped the Personal Computer. Apple’s first attempt at a “business” computer, the Apple ///, was a technical and commercial flop. The anti-corporate “computer for the rest of us” marketing pitch that accompanied the introduction of the Macintosh in 1984 went over badly with business at a time when businesses were buying most of the computers.

The argument, occasionally still heard, that the better system lost is arguable at best. The Mac was a huge usability breakthrough, but in the early years, the graphical user interface demanded more than the hardware could deliver. Microsoft made a major leap with Windows 3.0 in 1990 and by the mid-1990s, when consumer sales became really important, Windows 95 and Windows NT were moving ahead of the aging Mac OS. Mac continued to slip as Windows forged ahead and it wasn’t until Apple’s big switch to Intel processors in 2005, along with increasingly powerful and stable versions of OS X, that Apple had a real claim to equality, let alone superiority.

But the divergent directions indicated by Windows 8 and OS X Mavericks change everything. Although it was Steve Jobs who began talk of the post-PC world when he introduced the iPad in 2010, it seems like it is Microsoft that has bought into the idea. The attempt with Windows 8 to design an operating system that spans traditional PCs, hybrids, and tablets has resulted in a sub-optimal experience on both. With Windows 8.1, Microsoft seems on its way to fixing some of the worst problems of Windows 8 (and its ill-begotten sibling, Windows RT) on tablets by eliminating some, perhaps most, of the need to drop back into Desktop mode to accomplish key tasks. But only relatively minor changes are planned for Windows 8 on a traditional PC, an experience that leaves many users longing for Windows 7.

Mavericks, by contrast, marks Apple’s renewed commitment to the traditional PC, a commitment that had been at least a little in doubt with the surge of iOS features into Lion and Mountain Lion. Except for improved notifications, an idea that borrows from and builds on iOS, the big changes in Mavericks are Serious PC Stuff: A new tabbed interface for the Finder, tagging for better file location and classification, major under-the-hood changes to cut power consumption, and greatly improved support for multi-display setups. Along with a badly overdue, but radical and exciting overhaul of the Mac Pro, Apple is telling Mac users, “We’ve got your back.” [pullquote]Mavericks, by contrast, marks Apple’s renewed commitment to the traditional PC, a commitment that had been at least a little in doubt with the surge of iOS features into Lion and Mountain Lion.[/pullquote]

Apple is now in a position to claim clear superiority in traditional PCs. The new MacBook Airs (pictured) are the first computers to ship with Intel’s next-generation Haswell processors and through a combination of close work with Intel and a lot of software fine tuning, Apple is able to beat the industry by a wide margin on battery life–something made possible by complete control of hardware and software. I expect Apple will do equally well with its MacBook Pros and iMacs this fall when Intel ships the rest of its Haswell line.

Macs could rule the world. Apple’s market share has been rising as Windows PC sales have fallen sharply while Mac sales have been mostly flat. I expect this trend to continue and for Apple’s share to rise. But–in partial answer to the question raised by John Kirk earlier this week–I don’t expect Apple to go after the mass market still dominated by Windows.

The reason is simple. According to NPD, the average selling price of a windows PC at the end of last year was $420. ((NPD data probably understate the average somewhat because the firm measures retail sales, missing the often more expensive units sold directly to enterprise buyers.)) The cheapest Mac is a $599 mini, and the cheapest laptop is a $999. Apple will cheerfully sell you an iPad for as little as $329 and provide a first-rate tablet experience, but there is no way it can provide what it regards as a satisfactory Mac experience at the price most windows machines sell for. ((I don’t mean to perpetuate the myth of an Apple premium. On an equal feature basis, Macs are no more expensive than Windows systems. It’s just that Apple only sells top-of-the-line products.))

The great bulk of buyers is unable or unwilling to spend what Apple commands, and Apple is unwilling to cheapen its products, slash its margins, or both, to meet the market. As a result, Apple will settle for modest gains in share .

This does not mean, however, that Microsoft is home free to at least hold on to its share of a shrinking market. The real threat could come from the bottom, from Google’s Chromebook. Chrome OS, whose only application is the Chrome browser and which depends on web apps (key ones modified to work offline) to do anything, performs well on hardware far more modest than required for Windows or Mac OS. For users with relatively modest needs and good internet connectivity, a Chromebook is a low-cost viable alternative to both a tablet and a Windows laptop. And it will only get better as Google converges Chrome OS and Android, potentially bringing a richer store of apps to Chrome.

These days, the fact that Apple is not coming after them as hard as it might is cold comfort to Microsoft.

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.